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GOVERNMENT HELP FOR YOUR RETIREMENT

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The main reason for the problem is demographics. Quite hon- estly, people are living longer, more active lives. And while that is a good thing in general, it’s not such a good thing when it comes to social security. When the program was created in 1935, an average American had a life expectancy of 7712 years. Now, life expectancies are closer to 83 years, and they’re still climbing! (See Figure 13.2.) What this means is that as more Americans retire, there will be a need for a larger pool of workers to be paying into the system in order to support those collecting benefits. However, that’s not the way our nation’s population is trending.

In 1955, there were approximately seven workers supporting each person receiving Social Security benefits. But in about 30 years, it’s estimated that there will be two people paying money in for every one person drawing money out. That estimate includes all the baby boomers who will begin retiring around the year 2010 (approx- imately 77 million). All these changes in the population and its makeup will strain the social security system.

Congress has been aware of this problem for a very long time. However, they have only recently begun to take action. This is unfor-

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70 60

50

40 30 20 10

13

35

People (millions)

0

1950

2000

2030

Figure 13.2

By the year 2030, it’s estimated that there will be

approximately 69 million Americans age 65 and older, or about 20

percent of the population.

Compare that with 35 million in the year

2000 (12 percent of the population) and 13 million in 1950 (8 percent of the population), and you can see why Social Security will begin to

run out of money.

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